Know your options

In today’s world, every checking account comes with a string of features — online bill payment, overdraft protection, automatic withdrawals, direct deposit and e-alerts, to name a few.

To evaluate the options available, start by looking at the fees to make sure they are reasonable — or better yet, nonexistent, says Travis Parman, spokesman for Ally Bank based in Detroit.

Then move on to other factors, such as customer service. “Increasingly, people have hectic schedules and need to bank any time of the day,” says Parman. Some financial institutions offer 24/7 e-chat assistance, e-mail communication options and phone services.

And don’t overlook the online banking option. Online financial institutions save money on overhead, and those savings often get passed on to the customer, Parman says.

Get smart about fees

As noted in Bankrate’s 2010 Checking Study, free checking accounts are on the decline.

Fortunately, getting a free checking account is not impossible. You may need to simply sit down with a banker and ask, “How can I get this account for free?” says Denise Winston, founder of Money Start Here, a financial education company in Bakersfield, Calif.

Signing up for features such as direct deposit or an automatic savings plan can often get you that free checking account.

Once you have an account, be wary of overdraft fees. “Not only do they tend to be the larger single fee, but they’re the ones that can be tapped multiple times without (you) even realizing it,” says Daniel Penrod, senior industry analyst for the California Credit Union League in Ontario, Calif.

To avoid late charges, sign up for e-mail or text alerts that notify you when your balance is low, or sign up for overdraft protection.

Learn more about the fees to watch for at Bankrate’s report on checking trends.

Go automatic to pay bills

Setting up automatic withdrawals from your checking account to pay bills can help substantially. Since the money is taken from your account at the same time each month, “you’re guaranteed to be on time,” Penrod says.

To take full advantage of automatic withdrawals, start by making a list of bills you pay each month, such as a mortgage loan or a student loan. Then check online or contact the institution to ask if you can have the payment withdrawn automatically from your account each month.

To set up an automatic withdrawal, you’ll have to send in some paperwork and may need to sign a few forms. “It isn’t as easy as one or two clicks, but the benefits tend to outweigh the difficulty of setting it up,” says Penrod.

Maximize online benefits

Due to the costs associated with paper statement processing, many financial institutions now charge a monthly paper statement fee, says Anthony Pili, vice president of marketing and sales at Palisades Federal Credit Union in Pearl River, N.Y. If your bank charges this fee, ask to receive only e-statements and you’ll save a few dollars each month.

“E-mail and text-alert features are a great way to stay on top of your account,” says Winston. “You can get an alert for anything.” A few popular choices are direct deposit alerts, minimum balance notifications and overdraft alerts.

Be ATM-savvy

ATM fees are on the rise, and it doesn’t look like they’ll go down any time soon, according to Bankrate’s 2010 Checking Study.

To avoid ATM fees, look for checking accounts that come with participation in an ATM network, Pili says. ATM networks such as Allpoint and MoneyPass allow customers to withdraw money without a surcharge at thousands of ATMs in the U.S. and abroad.

Other financial institutions offer ATM fee refunds up to a certain amount each month, Pili says. If your checking account offers this option, ask if there is a limit on the refunds. You’ll also want to find out how the refunds are processed. Some banks automatically credit your account. Others may require you to bring in an ATM receipt.

To avoid the ATM altogether, use your debit card when shopping and ask for cash back. You’ll save yourself a trip to the ATM and the accompanying charges.

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